Oil Holds Losses Near 6-Year Low After OPEC Abandons Target

Brent and USA crude futures sunk beneath $40 a barrel, hitting February 2009 levels and extending Monday’s 6 percent rout, before paring losses on what traders said was most likely short-covering. US crude was trading at $37.82 a barrel, up just 17 cents from its last settlement and close to the 2015 and 7-year lows of the previous session.

At a meeting in Vienna on Friday, the Organization of the Petroleum Exporting Countries decided against cutting its oil output to lift prices, its president and Nigerian oil minister Emmanuel Ibe Kachikwu said.

As a result of ongoing oversupply, analysts said that prices would fall further, with Goldman Sachs seeing a possibility of $20 per barrel.

“We are only around $5 away and the oil price has moved nearly $5 in the last two days”.

Among the bigger losers, oil-services company Weatherford International shed 6.0 percent, while Devon Energy dived 10.1 percent after announcing $2.5 billion in deals to buy USA oil assets from smaller companies.

Crude oil futures tumbled to their lowest in almost seven years on Monday after OPEC failed to address a growing supply glut, while a stronger dollar made it more expensive to hold crude positions.

OPEC said that in light of its projections and “emphasizing its commitment to ensuring a long-term stable and balanced oil market for both producers and consumers, the conference agreed that member countries should continue to closely monitor developments in the coming months”.

“What is worrying me is not the price of today; it is what is happening in the industry”, chief executive Claudio Descalzi said in an interview with Bloomberg TV. Or is there further weakness to be witnessed in the commodity’s prices?

Oil prices have fallen by more than 50 percent in a little over a year from levels of well over $100 a barrel, provoked by the slowdown in China and other emerging market economies and the end of sanctions against Iran. That stance combined with slower global growth has left the world awash in oil, pushing down prices to their lowest level since 2009.

And then, there’s the matter of the weak global economic outlook.

Instead, its core members, led by top crude exporter Saudi Arabia, appeared to be readying for new battles for share in a market with record stockpiles and consuming about 2 million barrels per day (bpd) above production.